econ200notes - 21:15 1. 2. 3. 4.

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21:15 Need- there are no other substitutes  Free – doesn’t cause anyone anything 1. We do all things because of one reason and one reason only- SELF INTEREST! 2. Anything you do try to make money at it! 3. If you cant make money at it try to do it for “free.” 4. If you cant make money at it or do it for free make sure it is “tax deductible’!!! 5. You must give back to the community  Voluntary exchange= both partners benefit Involuntary exchange= one party benefits TR= Total Revenue =P (Price) x Q (Quantity)   TR does not equal profit Low ‘ball park’ your revenue  And high ‘ball park’ your cost TR>TC= profit Economics is the study of how individuals and societies experiencing virtually limitless  wants choose to allocate their scarce resources to satisfy their wants Economics=scarcity  Another name for productive resources is factors of production Land-rent of mortgage Labor- wages, salary, tips, com. Capital Stock- interest and dividends 
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21:15 5 Powers of Economic Thining 1. Resources cost more than you think Accounting costs- $ cost Opportunity cost- the next highest-valued alternative, same as implicit cost 2. All decisions are rational Rational- ones behavior is consistent with what one wants 3. All decisions are made at the margin Margin- the weighing of additional  costs and additional  benefits of a specific change in  the current situation 4. The answer to most questions is found in this simple statement: IT DEPENDS!! 5. People are maximizers 
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Absolute and Comparative Advantage  21:15 Absolute Advantage- one entity can produce something either faster than or greater  than another entity Comparative Advantage- one entity can produce something at a LOWER MARGINAL  OPPORTUNITY PRODUCTION COST cost than another entity                   U.S.             Canada Maple Syrup           5                      8 Copper Wire           6                      7 5 steps to figuring out comparative advantage 1.Know the Definition of comparative advantage 2. Set up a table: Ireland ex: 
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